Georgia Power Co., criticized for being hesitant in its embrace of renewable energy, plans to build its first large-scale solar power development — one that could light up about 1,250 homes.

The utility is seeking regulatory approval to build four to six ground-mounted and rooftop solar projects that would generate a combined 2.5 megawatts of clean power.

While a step in the right direction, the project is lip service and a fraction of what is being undertaken by Duke Energy and Florida Power & Light Co. (FPL), industry insiders say.

Georgia Power’s solar push is fueled by customer demand and the utility’s efforts to diversify its energy portfolio to include more renewable energy.

“We want to bring more solar [generation capacity] to the state of Georgia ... and drive down the price of solar,” said spokeswoman Lynn Wallace. “We want to increase the amount of renewables, specifically solar, in our energy portfolio.”

Some industry insiders aren’t impressed.

Solar projects of the size Georgia Power is proposing are launched weekly in places like California and New Jersey, said Jigar Shah, founder of solar energy services company SunEdison and CEO of Carbon War Room, a Richard Branson-backed Washington, D.C. nonprofit.

“[It’s] a deliberate move to delay the full implementation of renewable energy in Georgia,” Shah said, referring to the proposed solar development. “Georgia Power is among the most hostile utilities in the country to renewable energy.”

When it comes to solar projects, Georgia Power lags utilities in some neighboring states. FPL has, or is planning, more than 100 megawatts of solar-related projects. In May, Duke got regulatory OK to go ahead with a 10-megawatt solar project in North Carolina.

Georgia Power’s proposed solar installations are a “first step” and will give the company a better understanding of the technology and its economics, said Sy Allen, project manager of renewable development.

“This is just the beginning,” Allen said. “We want to make sure that we understand the [technologies and costs] so we can make informed decisions when we get approval to go forward with any larger solar project.”

Georgia Power operates a pilot project at its corporate campus that incorporates seven technologies, which pump out a combined 28 kilowatts of solar power.

Earlier this year, Georgia Power’s parent, Southern Co. inked a contract with Turner Renewable Energy to jointly acquire ownership of a planned 30 megawatt solar power project in New Mexico.

That development undercuts Georgia Power’s claims that it needs to further study the economics of solar power, said Peter Marte, CEO of Hannah Solar, an Atlanta solar project developer.

“You’re not investing in a 30-megawatt power plant ... unless you know the economics work out,” Marte said.

Chasing demand

Pending regulatory approval, construction on Georgia Power’s solar development could begin as early as this year, with the 2.5 megawatts expected to come online by 2013. The company declined to disclose the cost of the project, or possible locations of the installations.

A 2.5-megawatt development would require a $10 million to $18 million investment, depending on the kind of installations, said James Marlow, CEO of Radiance Solar, a solar project developer. To limit costs, Georgia Power is likely to put the installations on property it owns, preferably near a substation or power plant. The utility has several sites — buildings with large roofs, such as warehouses — that would be ideal for solar installations.

“Our customers have told us that they want more renewables in the state of Georgia,” Wallace said. “We have had a lot of solar developers come into the state; we have [large] commercial customers that want to have renewables in their portfolios.”

The Georgia Public Service Commission, which regulates utilities, is also encouraging the local utility to get more involved with renewable energy projects.

Renewable energy technologies are more cost-effective and viable than they were in the past, PSC Commissioner Robert Baker Jr. said.

“Solar power is not going to replace nuclear plants, or coal plants,” Baker said. “But, it’s going to provide a larger percentage, in the future, of our [energy] generation needs.”

Economics of solar

A desire to grow its renewable energy portfolio is tempered by the utility’s need to keep costs down for its subscriber base. Producing electricity from solar cells can be more than four times as expensive as fossil-fuel generated electricity.

Solar power costs have fallen from 35 cents to 40 cents per kilowatt/hour a few years ago, to between 17 cents and 25 cents per kilowatt/hour today, Wallace said. Compare that with the roughly 4 cents it costs to produce a kilowatt/hour of coal-generated electricity, she said.

Georgia Power buys and sells solar power at a premium through its Green Energy program, which has more than 4,000 customers. The utility pays 18.3 cents per kilowatt/hour for solar power it buys from the program’s subscribers and sells the power at $4.50 per 100 kilowatt/hour blocks.

Georgia’s solar industry boosters suggest solar power would cost less if Georgia Power spread the costs across its entire subscriber base, like it does with coal-, nuclear- or natural gas-generated power.

Spreading the cost of solar power generation across all Georgia Power customers would increase monthly electric bills by about the price of a can of Coke, Marlow said. In Colorado, where the cost of solar power is spread across the entire rate base, residents pay on average 50 cents more per month for renewable power, he said.

Regulators do not allow Georgia Power to spread the cost of solar power generation across its entire subscriber base, Wallace said.

That decision was made a year ago, PSC’s Baker said, because some commissioners felt the price of generating solar power was too high for Georgia Power’s general subscriber base to bear. As the price of solar power falls, that decision could get reversed by summer, he suggested.

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